HOW PROLONGED DROUGHTS AND FARM SUBSIDIES INFLUENCE ENTREPRENEURIAL VENTURES BY FARMERS

A conceptual model of entrepreneurial uptake by water-scarce farmers explores how farmers accumulate social and human capitals while managing multiple risks in current and future livelihood choices. Social networking and human capital accumulation differentially impact on successes in agriculture and entrepreneurial ventures. The risk of farm subsidy removal and the uncertainties associated with finding and succeeding in a suitable enterprise, present the farmer with difficult tradeoffs in terms of which type of capital to accumulate. Results suggest that in the presence of multiple risks, farmers may act to increase their investments in human capital even when chances of finding a suitable business opportunity are low; whereas in some cases, they may accumulate higher social capital to enhance their farm subsidy support even under better chances of finding suitable business opportunities. Further, an increase in risk of agricultural unviability, by itself, does not automatically lead to farmers shifting to enterprise.